Nevertheless, Australia, last year’s second-largest exporter of wheat, estimates that wheat prices may jump 20% in the year through June as a result of droughts from the U.S. to Russia, Bloomberg reports. Russia, the third largest exporter, is experiencing its coldest winter in 20 years after drought conditions devastated its crops. Meanwhile, the U.S. is reeling from its worst drought in half a century and Australia is also cuting its harvest and export estimates after dry weather conditions. [Wheat ETF Up 20% on Drought]
“Price movements in the second half of 2012-13 are expected to be closely linked to the harvest outcomes of major exporting countries in the southern hemisphere, such as Australia and Argentina, and seasonal conditions for plantings of the 2013-14 wheat crop in the northern hemisphere,” the bureau said in the article.
Abdolreza Abbassian, an economist at the FAO, warns that market may be “underestimating the problems” in wheat supplies.
Teucrium Wheat Fund
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Max Chen contributed to this article.